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- BUSINESS, Page 49SUPERMARKETSGrocery-Cart Wars
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- In the battle for customers, high tech is one way to compete
- with -- and sometimes beat -- low prices
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- By THOMAS MCCARROLL
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- As Helaine Alpert steers her shopping cart down one aisle
- and up another at the Food Emporium in Scarsdale, N.Y., an
- overhead electronic billboard flashes the specials of the day.
- On the rim of Alpert's cart, a 6-in. by 9-in. video screen
- automatically displays a list of specials in each aisle she
- passes. Electronic alert: Cup O' Noodles on sale, two for $1;
- veal chops, $6.99, a dollar off the regular price. "I used to
- scour all the flyers for bargains," says Alpert, a lawyer from
- nearby Edgemont, but now the computer takes care of that. Her
- basket filled, she takes her place in the check-out line. But
- rather than browse through the National Enquirer or Redbook, she
- passes the time playing a trivia game on the cart's computer.
- "It's surprising the way they're making shopping more convenient
- and less boring."
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- If President George Bush was amazed by the bar-code
- scanners he saw last month at the National Grocers Association
- convention in Orlando, he would be truly astounded by some of
- the technology found in state-of-the-art supermarkets like the
- Food Emporium. At Vons, a 283-store chain based in Arcadia,
- Calif., "talking" aisles are equipped with computerized voices
- that explain products to shoppers. At St. Louis-based Schnuck
- Markets, electronic "price tags" have replaced paper shelf
- labels. These new digital labels are linked to a central
- computer that changes shelf prices for 2,000 to 4,000 items a
- week and coordinates them with check-out registers. And at
- Safeway, the nation's third largest chain (after American Stores
- and Kroger), customers can shop from home, using a computerized
- catalog system to order anything from apricot jelly to zucchini.
- Shoppers can transmit an order, charge it to their credit card,
- and have delivery arranged -- all without a word to anyone at
- the store.
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- Not long ago, the most sophisticated piece of technology
- in most food stores was the produce scale. A grocer's idea of
- mass marketing was the weekly circular. Growth was taken for
- granted. But the nation's 31,000 supermarkets today face a
- different world. After expanding more than 5% a year during the
- 1980s, they have seen growth slowing since 1989. Last year sales
- grew only 2%, to $376 billion, largely because of the
- recession. Now profits are being squeezed more than the Charmin
- as stores struggle to cope with mounting takeover debt. Six of
- the top 12 supermarkets, including Safeway, Jewel and Lucky,
- were snapped up in buyouts during the past dec ade. The
- survivors face more competition than ever before. It is not
- uncommon to find three or four national chains -- not to mention
- a mass merchandiser like K Mart or Wal-Mart -- competing in the
- same territory. With tougher times ahead, grocery chains are
- turning to computers to gain a competitive edge.
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- The most vital link in any chain store's system is the
- check-out scanner. Introduced nearly 20 years ago as
- labor-saving devices, computerized cash registers are now
- installed in about 85% of all chain stores. But today's scanners
- do much more than tally prices. They track what was bought, how
- often, at what price and quantity and, increasingly, by whom.
- Stores use these data to develop pro motional programs that
- target specific groups of customers. About 4,000 store chains
- have formed frequent-shopper clubs that offer freebies and
- discounts to customers who sign up, based on how much they
- spend. Vons, for instance, mailed coupons for free turkeys to
- its VonsClub members who spent $400 or more at its stores during
- the eight weeks before Thanksgiving. Richmond-based Ukrop's used
- its scanner database to pick shoppers living in areas where a
- competing chain, Kroger, opened new stores and then sent them
- coupons.
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- Not every new idea passes muster. Several stores have
- silenced their "talking" aisles after customers complained of
- the constant annoyance. Low shopper interest forced New York's
- D'Agostino chain to pull the plug on an electronic-ordering
- service that enabled customers to shop from home using their
- personal computers. The industry is also facing growing public
- scrutiny over its burgeoning consumer databases, which many see
- as a threat to individual privacy.
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- But most of the new supermarket technology is aimed at
- shoppers inside the store, where buying decisions are made. Last
- week, in competition with Turner Broadcasting's Checkout
- Channel, NBC-TV introduced an in-store television system that
- will carry ads and other programming to shoppers waiting in
- check-out lines. Such systems will help reduce marketing
- expenses for companies by pinpointing their promotions more
- accurately. But they could also mean the end of one of the few
- remaining refuges from advertising.
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